Consumer confidence in Northern Ireland declined sharply in the first quarter of 2020 as the coronavirus pandemic had a negative impact on how people were feeling, according to the latest analysis published by Danske Bank.
The Danske Bank Northern Ireland Consumer Confidence Index fell to 119 in Q1 2020, down from 129 in the fourth quarter of last year and significantly below the reading of 139 posted in the first quarter of 2019. The Q1 2020 index reading was the lowest since 2013.
The survey was carried out during March and only partly captures the impact of the lockdown measures on sentiment levels.
When asked what factor had the largest negative impact on their confidence levels, 43 per cent of respondents pointed to global risks. This is considerably higher than in previous surveys and can be attributed to the coronavirus pandemic, given the extent to which it had already impacted countries across the globe at the time of the survey.
Thirty-six per cent of people surveyed expected their finances to worsen over the next year, compared with 20 per cent who expected their financial position to improve, again likely due to unease about the long-term impacts of the pandemic.
Total consumer spending is expected to be significantly lower than usual during the lockdown. Household expenditure on the purchase of cars, clothing and footwear, furniture and in restaurants is all expected to be lower. Spending on holidays is also likely to fall sharply given international travel has been reduced by the pandemic.
However, household spending may temporarily increase in some categories during the lockdown, such as food and drink, take away meals, cleaning materials, toiletries and soap. Spending on goods and services aimed at providing entertainment while staying at home, such as TV subscriptions, books and games is also expected to rise temporarily.
Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:
“The coronavirus pandemic was the main factor that contributed to the fall in confidence levels in the first quarter of the year, with notable declines in sentiment relating to how people felt about their future financial positions, job security and spending on expensive items.
“Given the measures put in place in response to the virus, households are likely to spend their money differently to how they normally would. At an aggregate level, the areas in which spending might temporarily increase are not expected to be anywhere near enough to offset the falls in expenditure on other goods and services. As such, we are projecting that total consumer spending will decline sharply in Northern Ireland as a result of the pandemic.
“Looking forward, confidence levels are one of the factors that will influence the pace of the recovery in consumer spending once the lockdown measures begin to be gradually lifted.”
You can read the full press release and report at danskebank.co.uk/economy